Facility fees: An alarming billing trend

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An employee decides to see an in-network doctor for a medical issue. At the end of the visit, they pay the applicable office visit copayment. All good?


Facility fees charged by hospital-owned clinics are a new wrinkle in the reimbursement battle. In addition to the charge for the doctor’s services, patients are frequently being billed for the use of the hospital’s facilities and equipment. Really? In the past, when services were performed in an independent doctor’s office, there was only one charge. But as more hospitals acquire physician groups we will see more of this billing practice. And the facility fee can be greater than the doctor’s fee.

Some claim payers have put exclusions in their contracts which deny facility- or clinic-based procedure codes when affixed to an office visit. But unless this is a part of the network payment agreement, it could leave the patient with a balance billing — even for in-network services.

And increasingly, with high deductible plans, the facility charge is the source of a great deal of discontent when assessed against the employee’s health savings account. For out-of-network doctors, facility fees would not be part of the customary charge so, in addition to the out-of-network charges exceeding the allowable threshold, the patient would be obligated to pay the entire disallowed facility fee.

Supported practice
Interestingly, Medicare reimbursements support this practice. In one 2014 report by the Medicare Payment Advisory Commission, Medicare paid twice as much for office visits at hospital-owned clinics as compared to private physician practices; paying $453 for an echocardiogram at hospital-owned facilities, but only $189 at privately owned offices, according to the 2014 report.

Also see:States petition to chart their own healthcare course.”

There has been a lot of litigation and legislative activity concerning these fees. So far, I have not seen legal settlements, but in New York the facility charging these fees now has to be registered under “Article 28” and a notice must be posted. And a new law went into effect in 2016 in Connecticut requiring that this practice be disclosed by a notice posted in the facility’s office.

Instead of thumbing through old magazines you may want to spend your time in the waiting room reading the notices on the walls. If you don’t, a surprise bill may be in your mailbox. So much for unchecked provider billing.

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